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Business Secretary Vince Cable said his Liberal Democrat colleague Sarah Teather was right to warn plans for a £500-a-week cap on household benefits could have "very serious social consequences", but he defended the need for such a cap.

Business Secretary Vince Cable has defended the need for a benefits cap Credit: Tim Ireland/PA Wire

Mr Cable said it was required to prevent housing benefit "escalating out of control" but had to be accompanied by an increase in the provision of affordable housing.

"What is immoral, and I have read her article carefully, is demonising poor people," he told BBC1's Andrew Marr Show.

"We have got to cap the housing benefit element while at the same time increasing the supply of affordable housing," the Business Secretary continued.

"That is absolutely critical because without that you will have very serious social consequences which Sarah has quite rightly warned about."

"The criticisms Sarah Teather is levelling against the Government's welfare reforms are hugely misinformed and therefore result in needless scaremongering," he told the Observer.

"It's not fair or right that benefits claimants receive higher incomes than hard-working families who are striving to get on in life. Our reforms bring fairness back to the system while ensuring we support the most vulnerable."